The exchange-traded fund (ETF) phenomenon has ruffled some feathers in the mutual fund space, as ETF vehicles have introduced liquid open-ended features to the mutual fund concept. Nevertheless, high-quality mutual funds are still available.

What constitutes a good mutual fund? Well, the question ultimately depends on your investment objectives. However, the basic features I look out for include market alignment, a fair expense ratio, reasonable liquidity and a compelling dividend yield.

I used the factors mentioned above to select three best-in-class mutual funds. Moreover, I ensured each fund was reasonably priced without being impeded by significant premiums to net asset value.

Without further ado, here are three high-quality mutual funds to consider.

Mutual Funds to Buy: Fidelity Government Money Market Fund (SPAXX)

As its name implies, the Fidelity Government Money Market Fund (MUTF:SPAXX) is a money market fund. It primarily invests in short-term U.S. Treasury bills and agency floating rate securities to deliver its shareholders with inflation-beating income.

The U.S. interest rate roadmap is highly opaque. As such, this low-duration mutual fund makes sense because it doesn’t onboard a significant amount of interest rate price sensitivity. Moreover, while a 2024 interest rate pivot is possible, interest rates remain elevated, meaning SPAXX has solid income-based prospects.

Let’s examine what SPAXX offers its shareholders.

The mutual fund’s salient data illustrates excellent total returns. For example, it has a seven-day yield of 4.96% and an annualized gross expense ratio of merely 0.42%. Additionally, SPAXX is highly liquid, making it an ideal tactical play in today’s market environment.

Although this mutual fund won’t deliver life-changing returns, it is among the upper echelons of risk-free investment opportunities.

Northern U.S. Quality ESG Fund (NUESX)

Northern U.S. Quality ESG Fund (MUTF:NUESX) is an open-ended mutual fund that invests in a blend of Russell 1000 stocks. The fund doesn’t have a sectoral tilt. However, it seeks quality opportunities by emphasizing corporate profitability in its criteria. Additionally, NUESX has an environmental social and governance (ESG) overlay to ensure its constituents are secured by companies with managerial efficiency.

NUESX’s emphasis is backed by seminal financial market research. Investing in high-profitability companies generally leads to “throughout-the-economic cycle” stock performance. Moreover, an ESG filter reduces the possibility of earnings manipulation. As such, this mutual fund’s optics are geared toward perpetual performance.

The Northern U.S. Quality ESG Fund has a gross expense ratio of 0.44% and has delivered annualized returns of 12.65% since its inception in 2017. Additionally, NUESX distributes quarterly dividends, with its latest distribution, which took place in April, comprising a payout of 5 cents per share.

In my view, NUESX presents an alluring opportunity to those seeking capital gains.

Mutual Funds to Buy: Hilton Tactical Income Fund (HCYAX)

The Hilton Tactical Income Fund (MUTF:HCYAX) is split into two pools: individual investors and institutional investors. The former, which is our focus today, trades under the ticker symbol HCYAX and allocates its capital to a blend of U.S. stocks and bonds.

HCYAX’s objective is to provide optimal volatility-adjusted returns by examining fundamental aspects. Moreover, the fund emphasizes tactical investing to add value. Although HCYAX’s five-year annualized return of 3.56% seems tame, the volatile economic environment adds allure to this open-ended mutual fund’s tactically driven methodology.

Amongst HCYAX’s primary holdings are U.S. Treasury bills and Microsoft (NASDAQ:MSFT). Moreover, HCYAX has exposure to collateralized loan obligations (CLOs) via the Janus Henderson CLO AAA ETF (NYSE:JAAA), which aligns it with an elevated interest rate environment.

HCYAX’s gross expense ratio of 1.49% is high due to its active management strategy. However, I think this vehicle is an excellent portfolio diversification option with asymmetrical upside potential.

On the date of publication, Steve Booyens did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.